Question

2. What is the net cash used by investing activities?

3. What is the net cash provided by financing activities?

Answer 1

Cash flow statement: It provides information about the historical changes in cash and cash equivalent of an enterprise.It classify cash flows into-

1) Operating Activities

2) Investing Activities

3) Financing Activities

2 ) Investing Activities:

a) It relates to the purchase of long term assets or fixed assets such as furniture, machinery, equipment, Land etc.

b) Transactions related to purchase of long term investment is also Investing activites.

c) It includes acquisition and disposal of long term assets and investments which is not a part of cash and cash equivalents.

d) Examples: Purchase and sale of property,plant ,equipment and long term investments,Receipts from interest and dividends

3) Financing Activities:

a) Financing activites means long term funds or capital of an enterprise.

b) It also includes activities that results changes in the size and composition of owner’s capital (including preference shares).

c) Examples: Sale of preferred or common stock,Issuance of Bonds or Debentures,collection of loans,Acquired preferred or common stock,Repayment of long term debts,Payment of dividends and interest.

(Example) of ABC Company
Statement of Cash Flow(Direct Method)
For the year ended december 31,2018
	(amount in million)
Cash Flow from operating activities
Cash Received from customers	$                          304.00
Cash paid to customers	$                        (145.00)
Cash paid for Wages	$                          (60.00)
Cash paid for insurance	$                             (8.00)
Cash paid for Bonds	$                         (27.00)
Cash paid for Income Taxes	$                          (17.00)
Net Cash from operating activity	$                             47.00
Cash Flow from investing activities
Investment Revenue	$                               9.00
Sale of Investment	$                             35.00
Sale of building parts	$                               3.00
Net cash used by investing activities	$                             47.00
Cash flow from financing activities
Cash payment of lease liability	$                          (12.00)
Cash received from issue of common stock	$                             30.00
Reirement of Bonds payable	$                        (130.00)
Cash received from issue of Preferred stock	$                             50.00
Dividend Paid	$                          (30.00)
Net cash used by financing activities	$                          (92.00)
Net increase in cash	$                               2.00
Cash January 1,2018	$                             55.00
Cash December 31st 2018	$                             57.00